The CBO now estimates it would cost the federal government $1.168 trillion over the next decade to implement the Affordable Care Act’s insurance coverage provision, which includes funding the state Medicaid expansion, small business tax credits, and other subsidies to help individuals obtain health coverage through insurance exchanges. The CBO projected the cost to be $1.252 trillion back in March.

Most of the $84 billion reduction can be attributed to lowered Medicaid spending after the Supreme Court ruled that states cannot be compelled to expand Medicaid eligibility.

Thus, federal spending for Medicaid and the Children Health Insurance Program (CHIP) is projected to be $289 billion less because 6 million fewer people would be enrolled in the government insurance programs for low-income families and children than if the Medicaid expansion was upheld.

Of the 6 million who won’t qualify for Medicaid without the expanded eligibility, about 3 million are expected to be enrolled in health plans through the state-run insurance exchanges, which would drive up federal spending for tax credits and subsidies by about $210 billion. The remaining 3 million individuals will likely stay uninsured.

Overview of CBO’s updated cost estimates of the Affordable Care Act:

Current estimated net cost to implement the insurance coverage provision of the Affordable Care Act from 2012 through 2022: $1,168 billion (compared to $1,252 billion projected in March 2012)

SOURCE: Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision released on July 24, 2012 – page 2

Net reduction in spending to implement the insurance coverage provision of the Affordable Care Act from 2012 through 2012: $84 billion

SOURCE: Congressional Budget Office, Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision released on July 24, 2012 – page 2